Real GDP grew at an annual rate of 1.7% in the second quarter vs. the preliminary estimate of 1.6%. The 2.2% growth in consumer spending represents an upward revision from the earlier estimate of a 2.0% gain. The strength came from an upward revision of consumer outlays on services. A larger inventory accumulation was also reported for the second quarter compared with the prior estimate ($68.8 billion vs. $63.2 billion in preliminary report). A decline in non-residential structures and smaller growth of government spending provided most of the offset. Going forward, the U.S. economy is projected to grow at a tepid pace in the second half of 2010 of roughly 1-3/4%.

Jobless Claims Trending Down - Partly Due to Improving Labor Market, Partly Due to Expiration of Eligibility

Initial jobless claims fell 16,000 to 453,000 during the week ended September 25. The four-week moving average is down 30,000 to 258,000 in the past five weeks. Nonetheless, the level is still elevated. Continuing claims, which lag initial claims by one week, fell 83,000 to 4.457 million. Both initial and continuing claims show a small declining trend.

Unemployment insurance under special programs, which lag initial jobless claims by two weeks, fell 293,000 for the week ended September 11 (see chart 3) to 4.878 million. It appears that all unemployment claims, both regular and those under special programs, reflect partly improving labor market conditions and partly the loss of unemployment benefits because some people may no longer be eligible for unemployment benefits. The employment report for September, scheduled for publication on October 8, will offer more insights.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com
Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.

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